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Hopeful signs in commercial property

Friday, March 01 10:12:49

There was strong demand in all sectors of the Irish commercial property market during the first two months of 2013 with increased volumes of transactional activity being experienced across the country, according to consultants, CBRE.

CBRE have increased their prime rent series for office properties in Dublin and have also adjusted their prime yield series for some sectors due to the weight of international money chasing prime investment opportunities. CBRE also report some improvement in the availability of bank funding over recent months.

According to Marie Hunt, Executive Director and Head of Research at CBRE "Following on from the momentum in the second half of 2012, there has been an encouraging volume of activity in all sectors of the Irish commercial property market since the beginning of 2013. There is a steady volume of activity in all of the occupier markets and very strong demand from investors for prime Irish real estate, to the extent that yields for prime properties have now started to show signs of improvement. The recent liquidation of IBRC will undoubtedly escalate the pace and volume of deleveraging which was occurring anyway in the Irish market. Improving economic conditions coupled with attractive pricing and medium term rental growth prospects mean that investor demand is firmly focussed on good investment opportunities in the Irish market and we expect to see continued volumes of transactional activity both in the form of asset disposals and loan portfolio sales over the coming months".

For the occupier market, 2013 started well in the office occupier market with a steady volume of office letting activity concluded during January and February, a number of notable transactions being negotiated at present and some new requirements emerging.

Much of the focus in the Irish investment market in the first two months of this year has been on preparing assets for sale and completing the sale of assets that were brought to the market late last year, with very little new product having been released for sale during January and February, CBRE said.

Irish investors sold over E2.4 billion of property investments in the UK in 2012 in 62 transactions and CBRE expect to continue to see Irish owned assets in the UK being offered for sale over the course of 2013.

Much of the focus in recent weeks has been on loan portfolios, fuelled to some extent by NAMA's decision to bring two Irish loan portfolios to the market and the likelihood of other loan portfolios coming to the market following the liquidation of the Irish Banking Resolution Corporation (IBRC) last month. While there is undoubtedly very strong demand for Irish loan portfolios, there is a cohort of investors, particularly institutional investors, who have a preference for direct investment and will continue to focus their attention on purchasing prime property assets as they are released to the market. Some international investors are now moving up the risk curve in order to secure product.